Gold due to the fact it has had blossom over the years to be considered a store of value and a a safe haven asset have profound reasons for its price increase to continue.
Inflation Hedge: Gold has till now functioned as the safe-haven over the years. Among those who already hold considerable shares in their sectors, inflationary pressures are higher, which could lead to a rise in the cost of living. So, investors will usually buy gold in situations of such a kind of economic environments for preserving the value of purchasing power.
Geopolitical Uncertainty: The thing about gold is that it prospers when countries are unstable either politically or when the economy is under some risk. This is all the more bolstered by the fact that, during cases of escalated tension, conflicts or economic downturns by institution investors, the rate of flight to safety and security is often raised, thereby increasing gold demand and thus its price the higher.
Dollar Weakness: Gold is traded in dollars in global markets, hence the decline in the value of the greenback pushes gold price down for non-dollar currency holders. In the light of increasing apprehension over the extent of sustainability of the US fiscal and monetary policies, doubts on gold’s power ability hike up, that might lift gold prices.
Supply Constraints: As gold exploration is mainly imposed by the geological factors, it is really hard to supply the gold market with massively increased share of this rare metal. However, the scientific discoveries and technological progress can be made to prevent any supply shortage since their impact is not expected to be comparable to the one of the demand from emerging economies with rising middle class.
Central Bank Reserves: Among the central banks, especially those in developing countries, there is an ongoing practice of gold inventories that form the external reserves of these economies. Through such gradual demand these stores of value act as a foundation to the fluctuation in price daily.
Portfolio Diversification: Frequently to be seen as a diversify strategy, gold is included in the investment portfolios. In the context where the investors are hoping to reduce the risk of correlations among the assets, the need for gold as an asset class having an alternative role is also expected to continue.